4 Common Car Financing Mistakes

The idea of driving off with a “free” set of wheels is tempting, but have you ever paused for a second to think about what that really means? For starters, cars depreciate like crazy, especially in the first three years of ownership. So before signing that dotted line, it could be nice to avoid making some of these mistakes.

Ignoring early payoff penalties

Lenders never tell you this, but they usually penalise you for not sticking to the plan. It’s usually hidden somewhere in the fine print, and it’s pulled out whenever you try to clear the balance before term. The only way to staying clear of this is by asking them upfront and reading between the lines just in case there’re other nasty surprises.

Not having a badget

Sometimes, buyers get carried away by the monthly fees on a hire purchase deal. But if you do the math, the buying price of the car rises significantly while its resell value drops like a rock! And that is one financial mistake you want to avoid. So, the idea here is to know how much you can afford to spend on the purchase beforehand.

Not getting financial options in advance

Running short of money to spend on a new car? That’s okay. In fact, a lot of people don’t have the luxury of paying for cars up front. And they end up falling into the dealer’s hire purchase trap which is usually very expensive in the long run. So do your homework, and bring the best deal to the yard.

Not confirming the value of your trade-in

Just like in most high stake purchases, you need to pose as a survey client. Show the dealer that you know a little bit about price ranges. However, there’s a fine line between being savvy and cocky, so be ready to listen and also remember to bring bargaining power with you to the deal!